Keeping ahead in information technology
As more and more businesses continue to migrate to cloud technology to reduce costs and drive efficiencies across their IT operations, there is a growing appreciation of the challenges associated not only with transition, but also with ongoing management. While business objectives may be met through cloud adoption, with access improved and security tightened, the aftermath of migration can present a raft of new issues for business owners to consider.
Riccardo Abbate, a partner in the corporate department at Trowers & Hamlins, says: “One consequence of moving to the cloud is that you have to be a lot more thoughtful as a client about how you monitor the output you are getting. This is about good contract management, which requires monitoring the service you are receiving and making sure it is consistently fit for purpose.”
A company may be used to a level of forgiveness around IT glitches or failings while its own staff were managing servers on the premises, but once a third-party provider takes over responsibility, there should be an expectation of higher standards.
"Once you are outsourcing,” says Abbate, “then the onus is on you to include key performance indicators in the contract and measure whether the service is what it should be, not just in terms of functionality, but also in terms of service quality."
Vigilance can be required around the future-proofing terms included in a contract, which will often require software vendors to update their offering to meet new legislation. Abbate says many providers now challenge this and push the boundaries. This includes attempting to charge extra money for new products designed to better facilitate developments like compliance with the new General Data Protection Regulation, when these updates should have been provided under the terms of the original arrangement.
Amardeep Gill is a partner in the commercial department at the firm and is often involved in outsourcing projects for purchasers looking to access the latest developments in 5G, automation or artificial intelligence. He says that while companies may not immediately understand how such technologies actually work, there is still an obligation on the part of the buyer to really get to grips with what might be on offer.
“There is a need to kick the tyres and scrutinise what you have at the moment and what you might like in the future,” says Gill. “You need to challenge yourself as a customer before you go out into the marketplace, and have at least a reasonable understanding of what you want from an output point of view and what your requirements are.”
Abbate says: “If you start the process on the right foot, having done your homework properly, that gives bidders the ability to provide a more meaningful response to a tender and the result is a much more positive process.”
One of the biggest challenges during the course of IT purchasing is the need to identify and articulate what is really needed, and then to develop the evaluation criteria against which to judge providers when they respond.
There are many ways in which a business owner can build up the necessary level of understanding, with IT consultants typically able to add some real value. Also of great use are the company’s employees, who may be encouraged to enter into a dialogue with management about IT through the introduction of user groups. “You can really get some great insights into what is going to make a difference to users and what might not,” says Abbate about the establishment of user groups. “You have to make sure that you educate yourself and avail the organisation of the right expertise.”
"Many IT contracts are signed by businesses looking to facilitate new ways of working or public sector entities looking to employ technology to improve the services they provide. Both want to deliver something slightly differently or more effectively and a good specification at the outset is at the heart of making that achievable."
“Technology is moving at such a pace that it is very hard to keep up, but some understanding of what it can offer is essential in order to make astute purchasing decisions.” says Gill.
Getting the contract right at the outset is, of course, also critical. That means agreeing delivery requirements upfront and reflecting those in key performance indicators, service level credits and descriptions of service-level quality to which providers can be held to account.
Finally, it is vital to ensure you do not get locked into a contract that is in practice very difficult to get out of if service standards are not up to scratch. Abbate says: “Make sure the contract has the appropriate handover provisions, so that if you choose later down the line to move to another provider, the contract reasonably provides that the existing provider has got to do its best to effectively transition you to the successor. Only then do you have a meaningful right of termination, if you know that the incumbent has to provide all reasonable support in the event of a handover.”
Negotiating IT procurement arrangements can be a lengthy and exhausting process. Committing to becoming a savvy purchaser is important, as is getting the contract right, monitoring delivery against pre-determined metrics and having the courage to move on if service is not entirely up to standard. Transferring IT operations to the cloud can bring immeasurable benefits, but scrutiny is required on an ongoing basis.